Schnierson v. Retail Properties of America, Inc. et al

Filing 22

WRITTEN Opinion entered by the Honorable Joan B. Gottschall on 9/27/2012: Defendants' motion to reassign related cases [ 21 ] is granted, as is defendants' motion for leave to file a reply [ 35 ]. Babin v. Retail Properties of America, Inc., Case No. 12-cv-6433, and Schnierson v. Retail Properties of America, Inc., Case No. 12-cv-6743, are hereby reassigned to this court and deemed to be related to Sadler v. Retail Properties of America, Inc., Case No. 12-cv-5882. A status hearing in all three cases is set for 10/9/2012 at 9:30 a.m. (For further details see Written Opinion). Mailed notice. (et, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Joan H. Lefkow

CASE NUMBER

12 C 6743

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

Joan B. Gottschall
9/27/2012

Schnierson v. Retail Properties of America, Inc. et al

DOCKET ENTRY TEXT

Defendants’ motion to reassign related cases [21] is granted, as is defendants’ motion for leave to file a reply
[35]. Babin v. Retail Properties of America, Inc., Case No. 12-cv-6433, and Schnierson v. Retail Properties of
America, Inc., Case No. 12-cv-6743, are hereby reassigned to this court and deemed to be related to Sadler v.
Retail Properties of America, Inc., Case No. 12-cv-5882. A status hearing in all three cases is set for 10/9/2012
at 9:30 a.m.
O[ For further details see text below.]

Docketing to mail notices.

STATEMENT
The defendants in the instant case have moved to reassign two later-filed cases to this court. The plaintiff
here filed a putative class action complaint alleging that the defendants, Retail Properties of America (“Retail
Properties”), as well as various individual officers and board members, breached their fiduciary duty to the
plaintiff and unjustly enriched themselves. Most of the allegations relate to a certain ill-fated 2012 stock offering
that allegedly harmed shareholders who owned shares in Retail Properties’ precursor company, Inland Western
Retail Real Estate Trust, Inc., prior to 2012. Sadler claims that the defendants undertook acts which significantly
depreciated the value of the shares.
In Schierson v. Retail Properties of America, the plaintiffs bring claims that are very similar to Sadler’s,
alleging breach of fiduciary duty, unjust enrichment, and aiding and abetting the breach of fiduciary duty. The
plaintiff in that case agrees that Schierson should be deemed related to Sadler, and so the court will treat those
cases as related pursuant to Local Rule 40.4 as Schierson satisfies all of the conditions for reassignment under
Local Rule 40.4(b).
By contrast, the plaintiffs in Babin v. Retail Properties of America allege that they were also injured by
Retail Properties and various individual officers and board members, but they argue that they were preexisting
shareholders who purchased additional stock at an artificially inflated price pursuant to a Direct Reinvestment
Program (“DRP”). They, too, bring claims for breach of fiduciary duty and unjust enrichment; in addition, they
seek a corporate trust. These plaintiffs object to the motion for reassignment, however, arguing that the theories
of Babin and Sadler are at odds because Babin rests on a theory that shares were sold at an inflated price, whereas
Sadler rests on a theory that shares were sold at a diminished price. These plaintiffs argue that the proof offered
for each case at trial “may” potentially conflict, and because the cases must be susceptible to disposition in a
single proceeding to qualify for reassignment under Local Rule 40.4(b), the Babin plaintiffs argue that their case
should not be reassigned to this court.

12C6743 Schnierson v. Retail Properties of America, Inc. et al

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STATEMENT
The court disagrees. Local Rule 40.4(b) requires that (1) the cases both be pending in this court, (2)
assigning a single judge to both cases will likely result in a “substantial saving of judicial time and effort,” (3)
the earlier case has not progressed to the stage that reassignment of the later-filed case would delay the
proceedings, and (4) the cases be susceptible to disposition in a single proceeding. All of this is true here. In
particular, there can be no serious debate that reassignment of the Babin case will significantly decrease judicial
time and effort. Although the theories of each case may be slightly different, the overlap in the facts, relevant law,
and discovery indicate that reassignment would be the most efficient use of court resources. As to whether the
cases will be susceptible to disposition in a single proceeding, the court cannot be absolutely certain that some
sort of joint trial will be appropriate down the road. But the court does not have to be certain at this
stage—indeed, susceptibility by definition relates to a finding of potential or likelihood. Even the Babin plaintiffs
cannot say that a joint trial will not be feasible, and as the defendants point out, disposition in advance of
trial—such as by common defenses set out at summary judgment—may be possible. The court finds that the
Babin case satisfies the requirements set out in Local Rule 40.4, and orders the case to be reassigned to this court
and deemed related to the Sadler action.

12C6743 Schnierson v. Retail Properties of America, Inc. et al

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